Bharti Airtel prepays Rs 8,815 crore to clear deferred dues for spectrum acquired in 2015; shares up 1%

Bharti Airtel said on Friday it has prepaid Rs 8,815 crore to the government to clear deferred dues for the spectrum sale in 2015. The company said it made prepayments to save on interest payments. The installments were due in the financial year 2027 and 2028. “Over the last four months, Airtel has cleared INR 24,334 crores of its deferred spectrum liabilities much ahead of scheduled maturities,” the company said in a filing to the stock exchange. Bharti Airtel shares were up over 1 per cent at Rs 714.40 apiece in early trade on the BSE.

The telecom giant said it has made part repayment of deferred liabilities for the spectrum acquired in the auction of year 2015 to the Department of Telecom (DoT). Last year the company made prepayments worth over Rs 15,000 crore to clear dues to the government for 2014 sale of airwaves.

“These liabilities carried an interest rate of 10% and have been paid off through a combination of strong free cash generated by business, equity proceeds and significantly lower cost debt of similar tenor,” the company said. “Airtel continues to focus on financial flexibility via its capital structure including optimising cost of financing and capitalising on all opportunities of significant interest saves like this prepayment,” it added.

In December, Sunil Mittal-led Airtel prepaid Rs 15,519 crore to the DoT, clearing all dues relating to airwaves that it bought in the 2014 auction. At that time, the company said these prepayments at an estimate will lead to interest cost savings of at least Rs 3,400 crore. 

Earlier in January, Airtel informed the stock exchanges that it will not avail the option of conversion of the interest on deferred spectrum and AGR dues into equity, under the reforms package announced by the government. 

Government offered a shot in the arm to the telecom sector last year when it made announcements such as four-year break for telcos from paying statutory dues, change in the definition of revenue on which levies are paid, and allowing 100 per cent foreign investment through the automatic route.